10 years of Showcase Funds

Ten years, ten funds. Lots of observations. The Showcase Funds are particularly interesting because they are more relatable to general observers & angels than a large fund.

Showcase Funds are annual funds that invest across a subset of the companies that present at our annual Showcase. We raised the first one at the 2013 Showcase and it invested in eight companies.

Showcase Funds are relatable in my view because they invest a relatively small amount ($100-300k) per company and so do not have significant influence (albeit we occasionally do through our other funds), they invest relatively even amounts across the companies, they do not reserve any capital for follow on investments, and they are typically diversified across 8-10 companies and from pre-seed to Series B.

The Funds are also a relatively solid representative sample from the NZ ecosystem. They have included great companies like Halter , Crimson Education , Sharesies , Dawn Aerospace , Ethique Beauty , PowerbyProxi, Mint Innovation , First AML , Ideally , Shuttlerock , Parrot Analytics , Spalk , BioLumic , LawVu , Rocos, Tracksuit , and OpenStar Technologies . The Showcase has, of course, failed to attract everyone to the stage. Companies that have raised in the same period include Tradify , Kami , Hnry , Partly , Auror , Oritain , and PredictHQ .

A quick guide to what you are looking at:

• Each fund has three stacked bars. The first relates to fund size, the second to realised returns to date, and the third to holding value.
• Each bar within in the first stacked bar represents an individual investment. You will notice that the stacked bars are relatively similar heights. This is because we invested relatively evenly across the various companies.
• Each bar within the second stack also represents an individual company. You will notice there are fewer bars because not all the companies have generated returns. In some cases you will also notice significant parts of the stack are represented by one bar. Showcase Fund II is an example with Crimson.
• Good news = the right two stacked bars are taller than the first bar.
• Each bar within the third bar represents the holding value of an individual company. Holding value is the value of our shares based on the last transaction of that company.
• Below the graph I have summarised the # of companies within each fund, the positive returns to date, the positive secondaries (where we have sold a portion of our holding to other shareholders at a profit), and the # of losses (where the company has either failed entirely or returned less than the $ we invested).

Key observations:

• Results – positive or negative – take time. Somehow everyone knows this but no one accepts it. I suppose it’s the stubbornness/ambition of the entrepreneurial spirit. With Icehouse Ventures, I hope we are lucky enough to back some great companies. I don’t also hope we get extra lucky and have companies become great at a pace way faster than the average.
• The graph supports that results take time. Look to the right at the most recent funds and you will see little delta between fund size and holding value. Companies typically take 18-24 achieve key milestones that merit new rounds at higher valuations. You will also note an absence of positive returns. Companies like @Kitea Health and @Tracksuit likely still have years ahead to work towards their missions.
• If you are a fund manager of a young fund- or a relatively recent investor- don't beat yourself up for an absence of results to share. You should not have had any.
• Bad news tends to arrive before good news. It takes a lot longer to build a consequential company than to conclude the path to building one is too hard or not possible.
• Venture is outlier driven. 1 in 100 is probably more accurate than 1 in 10. The value of the returns and holding value generated by Crimson is not far off the entire amount we have invested across 91 companies.
• Secondaries- that is, selling shares in a company before it has sold or listed- appear to be increasing in frequency. Nine of the Showcase companies have enabled profitable secondary sales - and Showcase Funds have taken part in three. Our general approach is (1) never sell the farm / stick with the winners but (2) sell a small portion of a holding if it can return a large portion or multiple of a fund. In the case of Fund IV, we sold 20% of one holding and have paid off the fund. So, investors have all of their capital back and the opportunity for much more growth in value.
• Total failures are less frequent than one might expect. And take longer. Of the first five funds, only 12 of 54 companies have failed. While many others have diminishing prospects of becoming outliers, quite a few have built relatively solid businesses.

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Final fun fact: there are four investors who participated in all 10 Showcase Funds. Their investments in the last five funds (Showcase 6-10) have been funded by returns generated by earlier investments. Here's to this compounding continuing!